In "Bad News for Boomers," a provocatively headlined article that ran in The Wall Street Journal earlier this week, investment manager Robert D. Arnott delivered quite a stomach punch. Arnott argued that investment returns will be depressed over the next decade or two largely because of the demographics of the baby boom generation. He says, a balanced portfolio of stocks and bonds will yield about zero percent, after taxes, over the next 10 to 20 years because of U.S. population trends.

Now, Arnott is a pretty brilliant guy who has been studying markets and demographics for more than 20 years. And he’s had an impressive record running the $26.3 billion PIMCO All Asset Fund. But, personally, I don’t buy his analysis.

Let me explain Arnott’s theory before telling you why I find it flawed.

Arnott, a boomer himself, says that as the 78 million people in this age group retire, they’ll need to sell their stocks and bonds to support themselves, but there won’t be enough younger investors interested in buying them. This mismatch, he maintains, will keep prices of stocks and bonds from rising as much as they otherwise would.

“This year, for the first time in U.S. history, the population of senior citizens rises faster than the working-age population,” he wrote in the Journal. Less than 10 years ago, “the U.S. had 10 new additions to the working-age cadre for each one new senior citizen.” But that ratio will be turned on its head, as “it goes 10-to-1 in the opposite direction in 10 years. There will be 10 new senior citizens for each new working-age citizen.”

Arnott isn’t the first to hawk the demographics-is-destiny theory. Two analysts at the Federal Reserve Board of San Francisco, Zheng Liu and Mark Spiegel, came to a similar conclusion last August. By their math, the demographic bulge could send stock prices tumbling 13 percent by 2021, compared to 2010, and stocks wouldn't return to their 2010 levels until 2027.

But I have a few problems with Arnott’s argument. (And I’m not the only one: In 2006, the Government Accountability Office issued a report called “Retirement of Baby Boomers Is Unlikely to Precipitate Dramatic Decline in Market Returns, but Broader Risks Threaten Retirement Security.”)

My first problem with linking boomer demographics with stock market returns is that about 40 percent of people in this age group don’t even own stocks, either directly or in retirement plans or mutual funds.

Besides, we’re living in a global economy with global markets. Investors around the world are ready and willing to buy U.S. stocks when they think they’re good values. As Chris Farrell, a regular contributor to Next Avenue.org, has written: “Boomers aren’t all that important in the global scheme of things. The spread of private property rights, the embrace of markets around the world, the rise of China, India and other emerging markets is creating vast new pools of investment capital. Boomers will sell their portfolios into the global capital markets.”

What's more, some scholars have found very little historical evidence that demographics have moved U.S. markets. James Poterba, of the National Bureau of Economic Research, compared the relationship between the age of the U.S. population and returns of stocks, bonds and Treasury bills from 1926 to 2003. He found that population trends had “no effect” on stock prices.

It’s also unlikely that retirees will rush to sell stocks at the same time. With life expectancy getting stretched, they’ll need to hold onto their portfolios longer than retirees did in the past, spreading their sales of stocks and bonds over decades.

Finally, as Robert Doll, the chief equity strategist at Blackrock, an investment management firm told USA Today: “Demographics, while 100 percent predictable, move at glacial speeds." There's a distinct possibility that creeping, gradual population trends will be overshadowed by or mitigated by other factors that pop up more suddenly.

But you may buy Arnott's argument and if so, you may be wondering how to invest.

Arnott says emerging markets will be “the growth engine for the world economy in the coming 10 to 20 years.” So you might want to put some cash into mutual funds and ETFs that own stocks and bonds of places like Brazil, Russia, India and China.

In any case, investing a small portion of your portfolio in emerging markets is a good way to diversify. Just don't go overboard. The bulk of your investments should be diversified among high-quality U.S. stocks and bonds (or mutual funds that own them), such safe havens as bank accounts or money-market funds, and perhaps real estate.

“What baby boomers need to do is define what their income needs will be in retirement and then design a portfolio, and possibly their lifestyle, around that need and the resources they have,” says Bonnie Kirchner, author of Who Can You Trust With Your Money? and owner of SeaChange Financial Education, an investment advisory firm in Marion, Mass.

Remember, when it comes to your investments, it's not your generation that matters most. It’s you.